If you have a great idea for a business, you may want to run right out and purchase new office furniture, fancy pens with your company name and business cards with a logo you designed yourself. However, running a business is far more complex than presenting a sharp image.
Your business will likely have many serious issues to deal with, including contracts, employment law, taxes and potential liability. You can face each of these as they arise and hope you get it right, or you can plan from the start to protect yourself and your business by choosing a business entity that is most appropriate for your goals and registering your business with the state of Texas.
What are my choices?
You have several options for the type of entity you can choose for your business. Your choice will depend on many considerations, such as the amount of flexibility you want, how much control you desire over your business operations and profits, how much risk you are willing to take, and other important factors. When you decide how you intend to organize and operate your company, you may find one of the following is appropriate for your situation:
- Partnership: If someone else is sharing the financial or physical responsibilities, registering as a partnership may allow you more access to financing and certain tax benefits.
- Limited Liability Corporation: Your industry may qualify you to run your business as an LLC, which means that instead if you personally, the company assumes most of the liability in a lawsuit.
- Corporation: You have a variety of options if you wish to register your business as a corporation, which means the owners of the business are actually shareholders who invest in your company.
If none of these suits your needs, you may simply wish to operate your business as a sole proprietor. This requires no special registration, but it does leave you with some disadvantages. For example, you may not have much luck obtaining credit for your startup, and you may find yourself and your personal finances at risk if your business faces a lawsuit or problems with creditors.
You can certainly learn more about each of these entities by networking with other business owners and accessing the many resources available for business owners in Texas. With a well-constructed business plan, you may be better able to determine the most appropriate entity to help you meet your goals.